The common saying in aviation is “to make a million dollars in aviation you first need to start out with 2 million”. Although this has proven to be true, there are companies out there that have started with limited funds and have risen to the top. For example probably the best example is South West. Southwest, “Started in 1971 with just three planes, Southwest now flies more than 100 million passengers a year on a fleet of 680 planes and employs 45,000 people”(El-Erian, 2012). When South West was first formed, the US government still regulated the airline industry.  South West avoided the rules of government regulation because they initially only operated within the state of Texas. This means they did not have to bid for routes. South West also did not receive any government subsidies. During this time it was thought that the only way a passenger airline could survive and turn a profit was by receiving such subsidies, but the little airline known as the Love airline proved them wrong. Love airline was example the government needed to deregulate the industry.

            During the period following deregulation there were many newcomers to the aviation industry. Most of these new airlines didn’t last long or were swallowed up by the bigger airlines in merges. “Pan Am the airline that led America into the jet age in the 1950s” couldn’t compete anymore with the new structure of cost cutting and low fares and in 1991 therefore, they filed for bankruptcy (Dallos, 1991). So how did this tiny airline from Texas survive against all odds? Was their success considered a fluke or did they just have the secret recipe for success?

            South West succeeded “By keeping the important things simple and implementing them consistently, Southwest manages to succeed in an industry better known for losses and bankruptcies than sustained profitability”(El-Erian, 2012). They maintain a fleet of Boeing 737. With this type of aircraft there is less training for your flight crews. Also every maintenance technicians knows how to fix every plan. It seems like the management over at South West took the old saying “Keep it simple stupid” to heart. Maybe the best trick in Southwest’s bag is fuel hedging. Backing in 2008 “with oil hovering about around $100 a barrel, South West has come out on top. For 2008, it has locked in the price for about 70% of its jet fuel based on oil priced at $51 per barrel. For 2009, it has locked in 55% of its jet fuel based on that same price.”(Masson,N.D.) Then, is South West the only carrier that can compete with other large corporations since all the others have failed?

            The answer is no. There just so happens to be another smaller, but growing carrier that also flies Boeing 737s. This Airline is Sun Country and for those who are unfamiliar they are based in Minneapolis flying to select cities all over North and South America. Their success didn’t come easy.  It all started “In 1982, a group of pilots and flight attendants from the defunct Braniff International banded together to form their own airline with the help of businessmen in the Twin Cities of Minneapolis/St. Paul, MN.”(Sun Country). They started with one 727 flying primarily charter operations for MTL vacation flying from Minnesota to Las Vegas. Within six weeks the company turned a profit and within 8 paid back their initial startup loan. By the late 90s Sun Country was knocking on Northwest’s door as it competed for the seasonal summer vacation travel market. In 2008 Sun Country was in bankruptcy court at the hands of their owner Tom Petters, after the F.B.I. found out he had been allegedly "siphoning" over $3 billion. With a 5 million dollar loan in bankruptcy court the little airline fought its way out of debt and turned around their finances. By 2011 “reported profits of $13 million last year after combined losses of nearly $60 million in 2007 and 2008. The airline posted a profit of $1.4 million in 2009”(Phelps, 2011). Now under the new owners Cambria the airline strives not to be the cheapest, but the best airline for its customers. They are once again providing amenities to their passengers that have long been slashed due to the price wars. With their new business model and their attention to details they are the 4^th largest volume carrier in Minneapolis.

            So as you can see the aviation industry isn’t just full of failure and heart break. There are companies that find success. All you need is a positive work ethic and the right business model, which seems to be keep things simple and take care of your customer base. If you can keep those to philosophies in mind and can get the financial backing it is possible to make a small fortune in the aviation industry.

References

(2015). Retrieved from https://www.suncountry.com/page/1/our-company.jsp

Dallos, R. (1991, January 1). Pan Am, a 50-Year Leader in Aviation, Goes Bankrupt : Economy: Carrier cites fuel costs, downturn and Flight 103 bombing. It says travelers will not be affected. - latimes. Retrieved from http://articles.latimes.com/1991-01-09/news/mn-7223_1_fuel-costs

El-Erian, M. (2014, June 14). The Secret to Southwest's Success - Bloomberg View. Retrieved from http://www.bloombergview.com/articles/2014-06-13/the-secret-to-southwest-s-success

Masson, M. (n.d.). Southwest's fuel gamble: Hedges keeps fares in check - ABC News. Retrieved from http://abcnews.go.com/Travel/story?id=5918252

Phelps, D. (2011, July 21). Cambria deal gives new life to Sun Country | Star Tribune. Retrieved from http://www.startribune.com/business/125906638.html

Phelps, D. (2013, September 23). Five years later: Tom Petters' Ponzi scheme | Star Tribune. Retrieved from http://www.startribune.com/business/224430151.html

Platt, A. (2014, October 31). Retrieved from https://www.minnpost.com/twin-cities-business/2014/10/after-15-years-turbulence-sun-country-finding-clear-air

sun country airlines history. (n.d.). Retrieved from www.braniffpages.com/syhistory.html